U.N. Seeks to Streamline Third World Energy Scheme

December 3, 2005

By Alister Doyle, Environment Correspondent

MONTREAL — A U.N. scheme to promote clean energy such as wind and solar power in the Third World is set to win a bigger budget at U.N. climate talks in Canada, but some experts said on Friday that planned reforms are half-hearted.

The novel project, part of the U.N.’s Kyoto Protocol for reining in global warming, has been hit by red tape and a lack of staff to vet schemes including hydroelectric plants in Honduras or an Indian plant to generate power from rice husks.

If successful, some estimates say the plan might funnel $100 billion in investments to the developing world and aid a shift from use of fossil fuels in power plants and factories whose emissions are widely blamed for stoking global warming.

“There has been a very clear lack of resources,” a senior Canadian official said of the administration of the so-called Clean Development Mechanism (CDM).

He said the U.N. November 28-Dec 9 talks of 189 nations in Montreal were considering raising the budget for running the program to $10-15 million a year from $6 million in 2005.

“I think negotiators will work out some kind of package deal,” he said.

Under the program, rich nations can invest in Third World projects and earn credits to help meet goals under Kyoto for cutting emissions of greenhouse gases back home.

So far 42 projects have been given the go-ahead but about 500 are waiting in the pipeline after stronger than expected interest. The Bonn-based secretariat of the U.N. climate convention aims to raise the number of staff overseeing the program next year to 38 from 20.

WEAK

“Money alone won’t solve the problems,” Edwin Aalders, manager of the International Emissions Trading Association, told Reuters. “We think that proposals on the table right now are somewhat weak.”

And many project planners say the registration process is tortuous. “It’s been very disappointing,” said Marcelo Junquiera of Econergy Brazil, involved in burning leftovers from sugar cane to generate electricity.

“Thirty five sugar mills have implemented projects but we have more than 200 others in Brazil which have not…because they don’t have a financial incentive,” he said.

One Brazilian plant, for capturing heat-trapping methane from a waste dump, got held up by three months by registration complexities — the delay meant that an extra 43,000 tonnes of greenhouse gases were emitted, Junquiera said.

The CDM schemes are part of efforts to limit greenhouse gases that could wreak havoc with the climate by spurring floods, mudslides and droughts and raise global sea levels.

Carbon dioxide in a European Union market meant to help squeeze industrial emissions lower trades at about 21.6 euros per ton.

But carbon dioxide credits earned by avoiding emissions under the CDM scheme are worth only 5-13 euros per ton because of uncertainties about the the program.

The first 50,000 tonnes of credits under the mechanism were issued last month, linked to hydropower projects in Honduras. Montreal negotiators are discussing levying $0.2 per ton from each credit to make the CDM self-funding in the longer term.